Bureaucrats in the government sector have a double role since they are both suppliers and demanders of public employment; they are publicly employed (supply labor) and they have an important say in deciding the size of the municipal employment (demand labor). In this paper we present and estimate a theoretical model that focuses on this double role of bureaucrats. The predictions from the theoretical model are supported by our empirical results: The estimates based on data from Swedish municipalities 1990–2002, show that wages have smaller effects on the demand for bureaucrats than on the demand for other types of public employees. Actually wages have no significant effect on the number of bureaucrats the municipality employs.
Introduction: Public employment constitutes a large part of total employment in many western countries. In 1995, e g, the average public sector share of total employment in the OECD countries was approximately 20 percent, ranging from 6 percent in Japan to approximately 30 percent in the Scandinavian coun-tries.In order to understand how the labor market works, we thus need to understand the public labor market, which differs from the private one in several aspects. Most important is perhaps the fact that decisions are made by politicians and bureaucrats rather than by business leaders.It is far from obvious that the first group is motivated by the same objectives as the second group; politicians and bureaucrats might, for example, beinterested in maximizing votes or budgets.This implies that the number of persons em-ployed in the public sector will not only be based on efficiency and/or equity considerations, but that other aspects are important as well.
Source: Institute for Labour Market Policy Evaluation
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